INCOME TAX ACT, 1961

Section 271(1)(c)

Penalty under section 271(1)(c) - Quantum addition restricted by Tribunal - Computation of penalty -

Assessee derived income from business of wholesale trading of vegetable oils, ghee, coconut and salt, etc. A Survey under section 133A was conducted at the business premises and during the course of survey, the assessee offered for taxation the amounts of undisclosed income on account of Cash, Stock and undisclosed purchases. But the same were not included by the assessee in its return of income. However, assessment was completed by making trading additions of alleged investments in the unaccounted purchases and other disallowances. CIT(A) confirmed the additions but Tribunal had restricted the additions. It was accordingly submitted that only basis of imposition of the penalty was the addition being alleged unexplained investment made in the purchase of stock and which was since deleted by Tribunal and the consequent penalty levied deserves to be deleted.Held: On perusal of the order passed by the Tribunal, there was a clear finding recorded that it was a case of unrecorded sales which was not disclosed by the assessee at the time of filing of return of income and therefore, contention of Department that penalty was rightly levied in this case invoking provisions of section 271(1)(c). Where the very basis of levy of penalty, being the quantum addition, was restricted by Tribunal in the quantum proceedings, the consequent levy of penalty under section 271(1)(c) shall also be required to be computed as against the addition made by AO. Thus, AO was directed to recompute the penalty under section 271(1)(c) by taking the quantum addition as the basis for such levy as confirmed by the Tribunal in the quantum proceedings and the remaining penalty was directed to be deleted.

Relied:ITO v. Suresh Chandra Koolwal (2004) 32 TW 23 (Jp) Ashok Kumar Soni v. Dy.CIT (2001) 72 TTJ 323 (Jd) : 2001 TaxPub(DT) 1426 (Jod-Trib), Karam Chand v. ACIT (2000) 73 ITD 434 (Chd): (2000) 68 TTJ 789 (Chd-Trib) : 2000 TaxPub(DT) 704 (Chd-Trib) andf Rishab Kumar Jain v. Asstt. CIT (1999) 63 TTJ 236 (Del) : 1999 TaxPub(DT) 0904 (Del-Trib).

REFERRED :

FAVOUR : Partly in assessee's favour.

A.Y. :

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